The practice of occupational licensure may not seem like a terribly controversial issue to the average American, but a recent case in North Carolina highlights the fundamental problems with such a system. Blogger Steve Cooksey is facing legal charges from the state for offering online dietary advice to diabetes sufferers. Cooksey was diagnosed with the condition several years ago and started his site as way to chronicle his own progress and to provide useful information for others.
It turns out that North Carolina has a law requiring nutritionists/dieticians to be licensed by the state in much the same way as doctors, hairstylists and florists (yes, you have to have a license to sell flowers.) Cooksey is now suing the state for violating his right to free speech as outlined under the First Amendment. Considering that Cooksey does not charge for his advice, nor does he claim any kind of professional qualifications, this should be a slam dunk, but it brings up a larger point about licensure in general.
Why is the government of North Carolina so keen on stopping Cooksey from offering his opinions? Is it, as they will surely claim, to protect the public health and prevent honest people from being duped by an unqualified amateur, or is there something else at work here?
Economists have long been divided over whether requiring occupational licenses is wise. Being a somewhat cynical (some would say realistic) group, many prominent scholars, starting with Reuben Kessell in the 1950s, have argued that the real purpose of mandating licenses has less to do with protecting citizens from charlatans, and more to do with protecting certain industries from competition, limiting supply and keeping prices high.
The process of obtaining the required license is frequently costly and time consuming, often requiring years of specialized education. It is not surprising, then, that such requirements exclude a large number of potential practitioners from offering their services. In New York City, the mandatory medallions required to operate a taxi service have been known to sell for as much as a million dollars. How is the ambitious small businessman to compete in such an environment?
This is especially hard on immigrants whose previous qualifications, however impressive they may be, are not recognized by the U.S. government, forcing them to start all over again. The case of the medical doctor from India or Pakistan being reduced to working in a convenience store is so well known as to have become almost cliché.
Industry lobbyists have convinced lawmakers that their livelihoods need to be protected at the expense not only of well-intentioned amateurs, but of consumers as well. Consumers benefit from having as many choices and as much information as possible. When governments restrict entry into a profession, they limit choices, filter information and preserve an artificially high price, while at the same time assuring consumers that it is for their own good.
The market structure resulting from licensure requirements is essentially a type of oligopoly, a small number of firms using their market power to control prices and output. It is worth noting that when this occurs naturally, as in the case of OPEC, the media is quick to cry foul, complaining of price gauging and unfair barriers to competition. It is curious that no one seems quite so outraged when these same barriers are purposely erected by the state.
In most markets, consumers are permitted to purchase goods and services of various levels of quality, depending upon the price they wish to pay. Those that cannot afford a Mercedes can buy a Toyota, and those that cannot afford a Toyota can buy a bicycle. Not so in a licensed industry, where consumers are forced to choose between premium services or none at all. With this in mind, voluntary certification has often been proposed as an alternative to licensure. This would enable the best practitioners to advertise their quality to potential customers as having been verified by an independent authority, much like a Zagat rating for restaurants. This would preserves high quality services while providing budget minded consumers with more options.
There are reasonable arguments for ensuring a minimum standard of quality in potentially dangerous fields such as medicine (and there are reasonable counter arguments as well) but cases such as that of Cooksey make the pitfalls of our current system obvious, and raise the question of whether the time has come to rethink occupational licensure.
Logan Albright is a writer in Washington, D.C
Source: AFF Doublethink Online | Joseph Hammond
Source: AFF Doublethink Online | Emma Elliott Freire